The Alberta Energy Regulator is forecasting that oil and gas capital spending, including oilsands, will drop to the lowest this year since 2009.
The combined expected outlay of $24.6 billion in 2019 is less than either the spend for conventional oil and gas or oilsands at peak in 2014, when the total reached $60.6 billion ($33.9 billion oilsands, $26.7 conventional).
“Industry sentiment remains pessimistic because of lack of market access,” the AER said this week in its annual reserves outlook.
“Continued infrastructure constraints along with production restrictions on oil from the Government of Alberta's mandated curtailment rules has caused producers to delay their capital spending programs, or even shift them outside of Alberta.
“Oilsands capital expenditures in 2019 are forecast to decrease by 19 per cent, reaching a low of C$10.9 billion, a level of spending not seen since 2005.
“The decrease is expected to be mainly because of lower spending in the mining sector as projects get completed and brought on-stream, such as Suncor Energy's Fort Hills and Canadian Natural Resources Limited's Horizon Phase 3 projects.”
The AER forecasts that total upstream capital spending will moderately increase to $26.5 billion in 2020 and $29.6 billion in 2021 “as market constraints are partially relieved by an increase in takeaway capacity through rail additions and Enbridge Inc.'s Mainline optimization and Line 3 replacement project.”
Oilsands capital expenditures are projected to increase after 2019, but remain relatively low when compared with the last decade, the AER said.
“Spending in the mining sector is projected to increase after 2019, mainly because of expansion and debottlenecking projects. However, with only one new potential mining project included over the forecast period and in situ spending focused on expansions, capital expenditures are projected to decrease from 2022 to 2028.”
Image: Joey Podlubny/JWN